To the Members of
Simplex Castings Limited
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of Simplex Castings Limited ('theCompany') which comprise the balance sheet as at 31st March 2020 and the Statement ofProfit and Loss (including Other Comprehensive Income) Statement of Changes in Equity andStatement of Cash Flows for the year then ended and notes to the financial statementsincluding a summary of significant accounting policies and other explanatory information(hereinafter referred to as the "standalone financial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 (the "Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS) and other accounting principles generally accepted in India ofthe state of affairs of the Company as at March 31 2020 and the loss and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India("ICAI") together with the ethical requirements that are relevant to our auditof the standalone financial statements under the provisions of the Act and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the ICAI's Code of Ethics. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our audit opinion onthe standalone financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.
we have determined the matters described below to be the key audit matters to becommunicated in our report.
|Sl No. Key Audit Matters ||How our audit addressed the Key Audit Matter |
|1. Contingent Liabilities || |
|As at 31st March 2020 company having contingent liabilities in respect of Income tax and claim before NCLT by one party. ||Discussed significant matters and their probability with Management. |
|The determination of the contingences and the level of disclosure required involve a high degree of judgement resulting in contingent liabilities being considered as a key audit matter (Refer Note - 31). ||Reviewing the assessment and appeal letter alongwith paper related to NCLT as presented by management before us. |
|2. As at 31st March 2020 one of the vendor has filed case under ||Review the letters and correspondence with vendors as presented by management before us. |
|NCLT for their dues amounting to Rs.13.52 lacs and also received notices from MSME Vendors in respect of their dues to the tune of Rs.156.45 lacs (Refer Note 32). ||We assessed the appropriateness of the related disclosures and considered it to be reasonable. |
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Management Discussion and AnalysisBoard's Report including Annexures to Board's Report and Corporate Governance but does notinclude standalone financial statements and our auditors report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Management's Responsibilities for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income changes in equity and cash flows of the Company in accordancewith the Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under Section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has in place an adequate internal financial controls system over financialreporting and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of Management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the ability ofthe company to continue as a going concern. If we conclude that a material uncertaintyexists we are required to draw attention in our auditors' report to the relateddisclosures in the standalone financial statements or if such disclosures are inadequateto modify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditors' report. However future events or conditions may cause the Companyto cease to continue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore key audit matters in our audit report unless lawor regulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the Annexure-A a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
2. As required by Section 143(3) of the Act we report that:
(a) we have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
(b) in our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;
(c) the balance sheet the statement of profit and loss (including other comprehensiveincome) the statement of cash flows and the statement of changes in equity dealt with bythis Report are in agreement with the books of account;
(d) in our opinion the aforesaid standalone financial statements comply with the IndAS specified under Section 133 of the Act read with relevant rule issued thereunder;
(e) on the basis of the written representations received from the directors as on 31March 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2020 from being appointed as a director in terms of Section164 (2) of the Act;
(f) with respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting;
(g) with respect to the other matters to be included in the Auditors' Report inaccordance with the requirements of Section 197 (16) of the Act as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inwith accordance with the provisions of Section 197 of the Act; and
(h) with respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. the Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements - Refer Note 31 to the standalonefinancial statements;
ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; and
iii. there has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
For OPSinghania & Co.
(ICAI Firm Regn. No.002172C)
per Sanjay Singhania
Raipur 30th July 2020
Annexure - A to the Independent Auditors' Report
The Annexure referred to in Independent Auditors' Report to the members of the Companyon the standalone Ind AS financial statements for the year ended 31 March 2020 we reportthat:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant & equipment.
(b) As explained to us all major assets except certain low value items viz furniture& fixtures and office equipment have been physically verified by the management atreasonable intervals. According to the information and explanation given to us nomaterial discrepancies were notice.
(c) The title deeds of immovable properties as disclosed in Note 4 & 5 to thefinancial statements are held in the name of the Company.
(ii) As explained to us the physical verification of inventories have been conductedat reasonable intervals by the management during the year. In our opinion the frequencyof the verification is reasonable. The discrepancies noticed on verification between thephysical stocks and the book records were not material and have been properly dealt within the books of account.
(iii) The company has not granted any secured or unsecured loan to the companiesfirms limited liability partnership firms or other parties covered in the registermaintained under section 189 of the Act therefore the provisions of clause 3 (iii) ofthe Order is not applicable to the company.
(iv) In our opinion and according to the information & explanations given to usthe Company has compiled with the provisions of Section 186 of the Act in respect of theloans and investment made and guarantees and security provided by it. The Company has notgranted any loans and made any investments or provided any guarantees or security to theparties covered under Section 185 of the Act.
(v) In our opinion and according to the information and explanations given to us thecompany has not accepted any deposits from public in terms of the directives issued bythe Reserve Bank of India and the provisions of Section 73 to 76 or any other relevantprovisions of the Act and rules framed thereunder; therefore the provisions of clause 3(v)of the Order is not applicable to the company.
(vi) We have broadly reviewed the books of account maintained by the company pursuantto the rules made by the Central Government for the maintenance of cost records undersection 148(1) of the Act in respect of Company's products to which the said rules aremade applicable and are of the opinion that prima facie the prescribed accounts andrecords have been made and maintained. We have however not made a detailed examinationof the records.
(vii) (a) According to the information & explanations given to us during the yearthe company is not regular in depositing undisputed statutory dues including providentfund employees' state insurance income tax goods & services tax cess and any otherstatutory dues with the appropriate authorities. According to the information &explanations given no undisputed amounts payable in respect of provident fund employees'state insurance income tax goods & services tax cess and any other statutory dueswere outstanding as at 31st March 2020 for a period of more than six months from the datethey became payable except the followings:
|Sl No. ||Nature of Dues ||Amount (Rs. in lacs) |
|1. ||Provident Fund ||49.64 |
|2. ||Employees' State Insurance ||6.23 |
(b) According to the information and explanations given to us there are no dues ofincome tax sales tax service tax goods & services tax custom duty excise dutyvalue added tax and cess which have not been deposited on account of any dispute exceptthe following cases:
|Name of the Statute ||Nature of the Dues ||Amount (Rs. in Lacs) ||Period to which the amount relates ||Forum where dispute is pending |
|Income Tax Act 1961 ||Income Tax Demand ||977.34 ||A.Y 2010-11 ||At High Court Mumbai |
|Income Tax Act 1961 ||Income Tax Demand ||7.01 ||A.Y 2006-07 A.Y 2009-10 A.Y 2015-16 & A.Y. 2017-18 ||Rectification petition yet to be filed |
(viii) The Company has defaulted in repayment of Rs.470.85 lacs in respect of cashcredit limits including letter of credits devolvement of the following banks and defaultin repayment of installments to financial institution by Rs.3.50 lacs. The defaultoccurred from the month of January'2020 and was not cleared until 31st March2020.
|Name of the Bank ||Amount (Rs. in lacs) ||Period of default |
|Bank of Baroda ||183.32 ||From 17th February'2020 |
|Union Bank of India ||287.53 ||From 21st January'2020 |
|Edelweiss Retail Finance Limited ||1.37 ||For the month of March' 2020 |
|Tata Capital Financial Service Ltd. ||0.68 ||For the month of March' 2020 |
|Magma Fincorp Limited ||1.45 ||For the month of Feb' 2020 |
(ix) The Company has not raised any moneys by way of initial public offer furtherpublic offer (including debt instruments). As the company has not raised any term loanduring the year therefore the provisions of clause 3(x) of the Order is not applicableto the company.
(x) In our opinion and according to the information and explanations given to us nofraud by the Company or on the Company by its officers or employees has been noticed orreported during the year. Therefore the provisions of clause 3(x) of the Order is notapplicable to the company.
(xi) The Company has provided for managerial remuneration during the year in accordancewith the requisite approvals mandated by the provisions of Section 197 read with ScheduleV of the Act.
(xii) As the Company is not a Nidhi Company and the Nidhi Rules 2014 are notapplicable to it. Therefore the provisions of clause 3(xii) of the Order is notapplicable to the company.
(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act and details of such transactions have beendisclosed in the standalone financial statements as required by the applicable accountingstandards.
(xiv) The company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review. Thereforethe provisions of clause 3(xiv) of the Order is not applicable to the company.
(xv) The Company has not entered into any non-cash transactions with its directors orpersons connected with him. Therefore the provisions of clause 3(xv) of the Order is notapplicable to the company.
(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934. Therefore the provisions of clause 3(xvi) of the Order is notapplicable to the company.
For OPSinghania & Co.
(ICAI Firm Regn. No.002172C)
per Sanjay Singhania
Raipur 30th July 2020
Annexure - B to the Independent Auditors' Report
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of SimplexCastings Limited (the "Company") as of 31 March 2020 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India ('ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the ICAI. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting was established and maintained and if such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of standalone financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31 March 2020 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the ICAI.
For O P Singhania & Co.
(ICAI Firm Regn. No.002172C)
per Sanjay Singhania
Raipur 30th July 2020.